12th January 2026

MACRO

Federal Reserve Investigation Roils Markets

The dollar, stocks, and bonds sold off after reports US prosecutors are investigating Fed Chair Jerome Powell over his testimony about the central bank’s building renovation project.

Powell, in a video statement, called the investigation a pretext as part of Trump’s ongoing campaign to pressure the Fed to lower rates and end central bank independence.

Trump said he didn’t know about the Justice Department subpoenas and that any criminal investigation wouldn’t be related to disagreements over interest rates.

FHFA Director Bill Pulte was a driving force behind the Trump administration’s decision to subpoena the Federal Reserve. Some Trump allies were alarmed, fearing it would upset the bond market and discourage Powell from leaving when his term ends in May.

(Wall Street Journal, Bloomberg, NBC News)

Trump Credit Card and Healthcare

Trump said credit card lenders would be “in violation of the law” if they don’t cap interest rates at 10% for one year.

Trump said Sunday he may veto a bill to extend Obamacare subsidies if Congress sends one to his desk.

(Bloomberg)

Venezuela Oil Developments

Trump pressed nearly two dozen oil executives Friday to plant flags in Venezuela and drill. However, they indicated they need security guarantees and an overhaul of Venezuela’s legal and commercial framework.

Exxon CEO Darren Woods said Venezuela is currently uninvestable without significant changes. Trump said he might block Exxon from drilling after the statement.

Oil companies are in hasty discussions to find tankers and put together operations to transfer crude from vessels and dilapidated Venezuelan ports.

The US may lift additional sanctions on Venezuela as early as next week to facilitate oil sales, according to Treasury Secretary Bessent.

Hedge funds hiked bullish wagers on US crude to a five-month high as fears of stunted Middle East oil flows grew amid Iran protests.

(Wall Street Journal, Reuters, Bloomberg)

US Economic Optimism

Wall Street is making bullish bets on the economy. Signs of optimism include rallying retail stocks and stubbornly high bond yields.

Morgan Stanley’s Wilson highlights that upside has been led by small caps and consumer discretionary as the market processes pricing power, AI adoption, deregulation, operating leverage, and lower rates.

US corporate bond sales hit $95 billion in the busiest week since the Covid pandemic.

(Wall Street Journal, Financial Times, Bloomberg)

Japan Developments

Prime Minister Sanae Takaichi may call an early general election, with reports suggesting she’s considering a February vote.

A Japanese mining ship departed Monday for a remote coral atoll to probe mud rich in rare earths, part of Tokyo’s drive to curb reliance on China.

(Reuters)

China Markets Hit Records

China stocks climbed to a decade-high Monday, led by AI and commercial space shares.

Stock turnover in Shanghai and Shenzhen reached an all-time high of 3.6 trillion yuan ($516 billion) as animal spirits continue to mount.

China’s yuan-denominated shares may rise further as institutional investors look to allocate more funds in mainland equities.

A former PBOC official expects the central bank to take “small steps” toward monetary easing in the near future.

The appreciation of the yuan does not necessarily indicate a revaluation, as it lacks support from underlying fundamentals, according to a former regulator.

The cost that mainland investors have to pay to guard against dollar losses fell to a three-year low.

China appointed a veteran negotiator with experience in export controls as Deputy Representative for International Trade Negotiations.

China is restarting soybean auctions after a three-week pause to clear storage space.

China can narrow its technological gap with the US driven by growing risk-taking and innovation, though lack of advanced chipmaking tools is hobbling the sector.

China has issued draft regulations for personal information collection from the internet.

China looks forward to deepening mutual trust with Canada during a rare visit by its prime minister.

(Bloomberg, Reuters, Shanghai Securities News)

European Developments

More than 60 economists implored EU parliamentarians to back the digital euro, warning the Eurozone would “lose control” of its own money without it.

Friedrich Merz faces pressure to ease the CDU’s “firewall” against Germany’s far-right ahead of regional elections.

France’s budget minister warned that adopting a 2026 finance bill risks being pushed back if lawmakers topple the government in confidence votes this week.

Marine Le Pen begins a crucial appeal that will determine whether she can run in the 2027 presidential election.

(Financial Times, Bloomberg, Reuters)

UK Labour Market

UK employers cut back hiring again in December. Permanent staff placements fell at the steepest rate since August as businesses grappled with rising costs and weak sentiment post-budget.

City of London firms held back on hiring with job vacancies dropping 13% compared to the prior quarter.

The Swiss Bankers Association rejected stricter capital requirements proposed by the government.

(Bloomberg)

Australia and Asia-Pacific

Australia will prioritise antimony, gallium, and rare earths in its A$1.2 billion critical minerals reserve to diversify supply chains dominated by China.

Australian household spending rose at a faster-than-expected pace in November.

US and India are close partners and will resolve their differences including over a long-delayed trade deal, said the new US Ambassador to India.

Indonesia’s fiscal deficit is likely to widen well beyond its legal limit this year due to spending on the nationwide free meals program.

(Wall Street Journal, Bloomberg)

Africa Trade Tensions

The signing of a trade deal between Kenya and China is being held up because of US pressure on the African country not to proceed.

(The Standard)

GEOPOLITICAL

Iran Crisis Escalates

Trump is scheduled to be briefed Tuesday on options to respond to Iran protests. Options could include boosting antigovernment sources online, deploying cyber weapons, placing more sanctions, and military strikes.

Trump said he’s reviewing military options after Iran was “starting to” cross his red line. “We’re looking at some very strong options,” he said.

Trump said “the leaders of Iran called” to negotiate. “A meeting is being set up.”

The US has not moved any forces in preparation for potential strikes. It would need to put assets in place not only to launch attacks but also protect American forces.

Trump said he plans to speak with Elon Musk about restoring internet in Iran.

Iran’s parliament speaker threatened to attack US bases in the Middle East, strike shipping lanes, and hit Israel if the US strikes first.

Over 500 people have been killed in two weeks of unrest.

(Wall Street Journal, Reuters)

Greenland and Arctic

Germany will propose setting up a joint NATO mission to monitor Arctic security interests, in a bid to ease tensions with the US over Greenland.

Germany is open to “joint action” with international partners to bolster supply chains and access to critical materials.

The UK is in talks with NATO allies about beefing up military presence in the Arctic.

Top diplomats from Denmark and Greenland will meet Secretary of State Rubio in Washington Wednesday.

(Bloomberg, Financial Times)

Rare Earths Summit

The US is hosting a gathering of G7 ministers to discuss rare earths this week, underscoring the shared push to develop alternative supplies.

(Bloomberg)

Ukraine

Ukraine over the weekend targeted three drilling platforms in the Caspian Sea owned by Lukoil to weaken Russia’s economic capacity.

(Bloomberg)

South Africa Naval Exercises

South Africa is hosting naval exercises with Iranian, Russian and Chinese warships, risking further US disapproval.

(Wall Street Journal)

EQUITIES

Google and Walmart AI Partnership

Google unveiled tools helping retailers roll out AI agents for shopping.

Walmart is partnering with Alphabet to offer AI-enhanced shopping on Google’s Gemini platform.

Walmart will join the Nasdaq 100 Index, replacing AstraZeneca.

Walmart plans to expand drone delivery to 150 additional stores, aiming for over 270 locations by late 2027.

(Wall Street Journal, Bloomberg)

Michael Burry Betting Against Oracle

Michael Burry, famed for criticising the AI boom, is betting against Oracle with put options.

(Bloomberg)

Nvidia and TSMC Developments

Nvidia has tapped Foxconn to co-develop the assembly and production process of Rubin-powered AI servers.

TSMC Arizona may add 2 more advanced packaging plants to meet strong AI demand, in addition to the two already announced.

Taiwan’s big memory chip packaging firms have hiked prices 30% amid strong demand and “overwhelming orders.”

(UDN, DigiTimes)

Global Smartphone Shipments

Global smartphone shipments rose 2% year-on-year in 2025. Apple led with a 20% share, followed by Samsung at 19% and Xiaomi at 13%.

(Reuters)

Meta Australia Ban

Meta has shut down almost 550,000 accounts in Australia to comply with the country’s social media ban for children.

(Bloomberg)

X Algorithm Going Public

Elon Musk said X will open to the public its new algorithm, including all code for organic and advertising recommendations, in seven days.

(Reuters)

AI Chatbot Controversies

Malaysia temporarily blocked access to Grok after the AI chatbot sparked global backlash for allowing sexualised images.

Anthropic is making it easier for patients and clinicians to use Claude for medical information, pushing into healthcare.

(Reuters, Bloomberg)

China Tech and Semiconductors

China’s domestic semiconductor equipment localisation rate rose from 25% to 35% in 2025, with core equipment substitution surpassing 40%.

CXMT, the leading Chinese memory-chip maker, plans to list on Shanghai’s tech board, aiming to raise $4 billion.

Shares of China’s biggest food-delivery firms climbed as the antitrust body launched a probe into competition practices.

Xpeng has hired banks for an IPO of its flying car unit in Hong Kong.

Chinese battery shares fell after Beijing unveiled plans to reduce some export tax rebates.

Chinese solar shares jumped after the government said it will cancel export rebates, potentially accelerating consolidation.

OmniVision rose as much as 6.7% in its Hong Kong debut after raising HK$4.8 billion.

BrainCo has filed confidentially for a Hong Kong IPO.

(Various sources)

European Developments

BE Semiconductor reported a sequential rise in Q4 orders, driven by 2.5D data center applications.

Heineken CEO Dolf van den Brink will step down at the end of May after nearly six years.

British Land CEO Simon Carter is stepping down to head P3 Logistics Parks.

Maersk is looking at increasing ethanol use as fuel to reduce China dependence.

(Reuters, Wall Street Journal, Financial Times)

Other Notable Moves

Forgent Power Solutions, a data center electrical equipment maker, filed for a US IPO.

India is proposing to require smartphone makers to share source code with the government, prompting opposition from Apple and Samsung.

Coinbase is pressuring lawmakers to preserve stablecoin rewards offerings ahead of a major crypto bill.

(Bloomberg, Reuters)

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